How the Next U.S. Economy Is Already Failing

This month on Colorlines we'll be talking a lot about how today's young people, dubbed the Millennial generation, will shape America's future. As Dom Apollon wrote yesterday, in explaining his in-depth research on this generation's views about race and racism, Millennials have been identified as the nation's most diverse generation ever. There's endless speculation among journalists and researchers alike about what that diversity will mean, including for the U.S. economy. But a sober accounting of both yesterday's and today's economy makes it clear that tomorrow's won't look much different for people of color, demographic diversity notwithstanding.

Indeed, things might look a hell of a lot worse for everybody, precisely because of the inequity that remains baked in. Stokely Baksh's infographic showed last week that today's graduates stride into a job market that is smaller than it has been in generations. Meanwhile, youth unemployment is higher than it's been since economists began tracking it, with black and Latino young people of all education levels lagging far behind whites in their ability to get a job. The next generation, in all its diversity, faces a difficult future.

I explored that difficult future in more depth in a special section of this month's National Journal, which focuses on "The Next Economy." In my essay, I explain that, regardless of the Millennials' diversity, they exist inside an economy that continues to disadvantage people of color. I write,

The pressing question, however, is how many of these young people will truly join the middle class. Will they reap the benefits of their parents' labor and achieve an economic security that enables them to buy homes, start businesses, and take road trips even with gasoline at $4 a gallon? This is where the complexities of America's racial politics, past and present, cloud the way.

I'll ruin the suspense of the query: No, they won't, unless U.S. economic policy finally meaningfully addresses the racial wealth gap. Politicians pay great lip service to the middle class, and much economic policy at least nominally aims to support that middle class. But families must already have wealth to benefit from most policy designed to build and perserve the middle class today--which means it does nothing to impact class mobility. Back in the post-War era, when America created the broad middle class that drove its global economic dominance during the 20th century, wealth-creation policies dramatically impacted class mobility--but they were limited to white people. We will remain trapped by that history until we undo it, and we will pass it on to this proudly diverse generation, too.

In the essay, I point to a troubling finding we've reported here at Colorlines, too:

One way that economists measure class mobility is by dividing income earners into five quintiles and seeing how many people move from one to another over time. In 2008, according to the Economic Policy Institute, a stunning 45 percent of black Americans who belonged to the middle-income group during their childhoods had slipped into the bottom group as adults. That is, nearly half of the civil-rights generation's middle-class parents watched their progeny slide down the economic ladder to the bottom.

This reversal of the American Dream has many causes. Surely, one is the fact that more than 15 percent of black college graduates younger than 25 were jobless last year--twice the rate of whites. After the 2001 recession, it took until mid-decade before black unemployment slipped comfortably into single digits; by this spring, it had climbed to 16 percent.

Maybe the clearest way to understand such a backsliding among blacks is to think beyond the specific measurements of economic health and consider families as part of a larger community. By any measure, over generations, black families in the aggregate have commanded fewer resources at their disposal. They've had lower incomes, scarcer savings, and a rate of property ownership that's been tenuous at best. Nor has the government or anyone else stepped in to counter these realities with public initiatives on the scale of those that created the white middle class.

Instead, the financial industry has exploited hard-pressed black families, whether by redlining or by peddling credit to subprime borrowers. Drive through any heavily black neighborhood and you'll see what wonky research doesn't make plain--the multitude of lenders who jack up interest rates to customers who borrow against paychecks, tax refunds, and even household appliances. The relatively few black families that succeed in building up their assets must swim against the tide.

Until we make different choices as a country, these troubling facts will remain the case, not just for African Americans but for the Latino families that are so dramatically reshaping U.S. demographics as well. The future is not bright, because it remains dimmed by America's ugly past.